After reversing a slide in supermarket sales, Woolworths is hoping to rebuild bridges with suppliers and win more shoppers by giving food and grocery manufacturers unprecedented access to customer data.

Woolworths is aiming to sign up most of its 3000-odd suppliers to a new Supplier Connect program by the end of June after launching a successful pilot scheme with a dozen partners last October.

Under the program, suppliers receive free monthly scorecards and commercial reports which analyse and measure their performance against rival brands in various categories based on sales, returns, service, market share and customer loyalty.

Suppliers can opt to pay for additional reports and tools which analyse shopper spending habits by frequency, budget and level of engagement and provide insights into promotional effectiveness, ranging changes and marketing solutions.

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Some say Supplier Connect is a major improvement on Woolworths' former program, Platinum Partners, and offers valuable insights into not only customer preferences but Woolworths' ranging decisions and pricing strategy at a time when the major supermarket chains are rationalising their ranges, cutting prices and trying to differentiate through new products and categories.

'A better flow'

"It's a better flow of information and suppliers can see the metrics they're being judged under ... suppliers can see how they're performing against metrics that are important to Woolworths," one industry source told The Australian Financial Review.

However, some suppliers see it as means of recouping margin following Woolworths' $1 billion investment into grocery prices and service, which decimated margins but helped restore same-store sales growth in the December-half.

The minimum cost of subscribing to additional data and insights tools is $135,000 and large suppliers will pay between 0.3 per cent and 0.7 per cent of retail sales, depending on their performance rank and bundle of services.

"There's no compulsion to buy these packages but if you're a supplier and perform poorly on scorecards implicitly there's a pressure there to buy the data insight packages and move up the scale," one source said.

Woolworths' head of buying, Steve Donohue, said that initial feedback from suppliers had been positive and uptake had been strong, particularly after Christmas. He defended the fees, saying monthly scorecards and commercial reports were free and suppliers would recoup the cost of additional reports through higher returns.

Not about profit

"Our primary purpose here is not to make a profit, our primary purpose is to find ways to build better plans to meet customer needs," Mr Donohue told the Financial Review. "It's more about making sure the tools are of value to the supplier rather than us trying to sell them more."

"The cornerstone of Supplier Connect is a common understanding of customer behaviour through the free provision of data," he said. "We believe there's value in us all having visibility of what's going on and that shouldn't come at a cost at that level."

"We have 3000-odd suppliers and we'd like to think that by the end of the financial year we'll be able to provide all those suppliers with both those (scorecards and commercial) reports."

"In an age where data for both the retailer and supplier is such a critical element in decision-making we want to understand that the products our partner Quantium is providing are of value and suppliers get a return on investment."

"If what we are offering to suppliers doesn't meet their needs we'll reassess it and work out ways to add more value," he added. "Thus far the feedback has been really positive and the uptake has been encouraging."

Common interest

Woolworths believes the new program played a small role in its sales rebound in the December-half through better planning and expects further gains over the next 12 months as new products are developed and promotions are rolled out.

"That more single-minded focus on the customer in partnership with suppliers is going to continue to deliver outcomes," Mr Donohue said.

Woolworths also believes the new program will help repair its relationship with suppliers after the Mind the Gap case last year, when the competition and consumer commission accused the retailer of unconscionable conduct by making unreasonable and unfair demands for money from suppliers to fill a hole in its profits.

"Any effort we make to be open and share customer insights hopefully goes to building better relationships," said Mr Donohue.

"Ultimately we have a common interest in serving those customer needs – what this is intended to do is find ways to better serve customer needs."